BP agrees to $20 billion fund for spill claims

By IBT Staff Reporter On 06/16/10 AT 3:16 PM

BP Plc on Wednesday agreed to a demand by U.S. President Barack Obama to pay $20 billion into a special fund to handle claims from its huge Gulf of Mexico oil spill and said it was suspending payment of dividends this year.

Obama announced the deal on the special fund after White House officials held four-hour talks with BP executives on the 58-day-old oil spill crisis. He said the money would go toward making the Gulf Coast whole again.

Obama, who has been criticized by some for not being tough enough on BP, demanded in Wednesday's White House meeting that it set aside money in an independently administered fund to pay for claims arising from the worst oil spill in U.S. history.

An April 20 explosion on an offshore rig owned by the British energy giant killed 11 workers and ruptured a deep-sea well. The ensuing spill has fouled 120 miles of U.S. coastline, imperiled multibillion-dollar fishing and tourism industries and killed birds, sea turtles and dolphins.

In a conciliatory statement outside the White House, BP chairman Carl-Henric Svanberg apologized to the American people on behalf of BP. I do thank you for the patience that you have during this difficult time, he said.

Svanberg said BP's board had agreed not to pay dividends this year and promised to make sure damage claims were handled swiftly and fairly.

Obama had called for a special third-party administered fund after hearing first-hand complaints from Gulf coast residents that BP's claims process was too long and complicated and that the company was paying out too little money.

He stressed, however, that it did not put a cap on BP's liabilities for the disaster.

We will continue to hold BP and all other responsible parties accountable, he said at the White House.

Obama said BP had also agreed to set aside $100 million for workers who had lost jobs because of a six-month moratorium his administration imposed on deepwater drilling after the spill.

BP is a strong and viable company, and it is in all of our interests that it remain so, Obama said.

BP's shares gyrated in volatile New York trading, dropping as much as 5 percent in the morning before swinging back to punch into positive territory after news of the agreement on the fund, known as an escrow account.

(Additional reporting by Matt Spetalnick, Caren Bohan, Patricia Zengerle and Alister Bull in Washington, Estelle Shirbon and Tom Bergin in London and Kristen Hays in Houston; Writing Ross Colvin; Editing by Will Dunham)

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